Your Down Payment
Lots of buyers qualify for several different kinds of mortgages, but they don't have much to put up the standard down payment. Here are a few straightforward methods that will help you get together a down payment
Cut expenses and save. Be on the look-out for ways to reduce your monthly expenditures to put away money for a down payment. There are bank programs through which a specific portion of your paycheck is automatically deposited into savings each pay period. Some practical ways to build up funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.
Sell items you do not really need and find a second job. Perhaps you can get an additional job to get your down payment money. In addition, you can make a comprehensive inventory of items you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelry stores. A closetful of small items could add up to a fair amount at a garage or tag sale. You might also explore what any investments you hold may bring if sold.
Borrow funds from a retirement plan. Research the details for your individual plan. It is possible to borrow money from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Make sure you understand about any penalties, the way this may affect on taxes, and repayment obligation.
Ask for assistance from generous family members. First-time homebuyers somtimes receive down payment assistance from caring parents and other family members who may be able to help get them in their first home. Your family members may be eager to help you reach the milestone of owning your own home.
Research housing finance agencies. Special mortgate loan programs are given to buyers in specific situations, such as low income homebuyers or people planning to improve homes in a specific neighborhood, among others. With the help of this type of agency, you may receive an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies can help eligible homebuyers with a reduced interest rate, get you your down payment, and offer other assistance. These non-profit agencies exist to boost community in certain areas.
Find out about low-down and no-down mortgages.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting home financing.
FHA aids first-time homebuyers and others who may not be able to qualify for a traditional loan by themselves, by offering mortgage insurance to the lenders.
Interest rates with an FHA loan are normally the going interest rate, but the down payment amounts for an FHA loan are smaller than those of conventional loans. Closing costs may be covered by the mortgage, while your down payment could be as low as 3% of the purchase price.
- VA loans
Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and provides the advantage of a competitive interest rate. Even though the VA doesn't actually provide the mortgages, it does issue a certificate of eligibility to apply for a VA loan.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close along with the first. Generally the piggyback loan is for 10 percent of the purchase amount, while the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. You would borrow the largest portion of the purchase price from a traditional lender and borrow the remaining amount from the seller. Usually you'll pay a somewhat higher interest rate on the loan from the seller.
No matter your strategy of pulling together down payment funds, the satisfaction of reaching the goal of living in your own home will be just as great!
Want to discuss the best options for down payments? Give us a call at 407-834-3377.
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